Mobiles: Outright or Plan?
Should you buy a mobile phone outright or sign up for a phone plan?
This is the age old question most people have been asking. While the allure of a “free” phone might be attractive to most people, it may not always be the cheapest option. The general rule is if you are a heavy user, then a phone plan would be cheaper. If you are not a heavy user, then it may be cheaper for you to buy your own mobile phone and subscribe to a BYO plan. A lot also depends on what type of phone you want, how much you pay for it and what carrier you have chosen. Always do your own research and choose the option that best suits you.
Let’s say for example that you are a heavy user. The carriers would gladly “subsidise” your phone as they can recover the cost of the phone and make some profit from you over the 24 month contract. A heavy user would usually need to sign up for an “unlimited” plan which provides unlimited call and text plus a few Gigabytes of data. Taking Telstra as an example, a BYO unlimited plan with 7GB of data costs $70 a month. The same plan with a Samsung Galaxy S6 edge gold coloured 64GB mobile phone costs $97 a month on a 24 month contract. Therefore the effective cost of the mobile phone is $27 per month (the difference between the two plans) for 24 months, making it $648. This mobile phone cost $1,047 outright at Officeworks which is the probably the cheapest price you can get for the phone today.
In this case, it is definitely cheaper to sign up for a phone plan. The savings over 24 months is $399.
| Plan Type | Monthly Plan Charge | Contract length | Minimum Cost | Samsung S6 Edge 64GB Cost | Total |
|---|---|---|---|---|---|
| Heavy user on Mobile Plan | $97.00 | 24 Months | $2,328.00 | $0.00 | $2,328.00 |
| Heavy user on SIM only Plan | $70.00 | 24 Months | $1,680.00 | $1,047.00 | $2,727.00 |
Now let’s look at the case where you are a light user and use around $300 worth of calls (based on Telstra’s rates) and 500MB of data a month. Telstra has a SIM only plan (mobile phone not included) that suits your usage for $35 a month. For the Samsung Galaxy S6 edge 64 GB, Telstra’s lowest value phone plan is $81 a month. The effective cost of the mobile phone is $1,104. In this case, you would be better off by $57 if you bought your own mobile phone. In addition, you are not bound by the 24 month contract.
If you a very light user you can subscribe to iiCom’s “pay as you go plan” and only pay for what you use, you may be even far better off.
| Plan Type | Monthly Plan Charge | Contract length | Minimum Cost | Samsung S6 Edge 64GB Cost | Total |
|---|---|---|---|---|---|
| Light user on Mobile Plan | $81.00 | 24 Months | $1,944.00 | $0.00 | $1,944.00 |
| Light user on SIM only Plan | $35.00 | 24 Months | $840.00 | $1,047.00 | $1,887.00 |
| Light user on iiCom's Plan | $19.00 | 24 Months | $456.00 | $1,047.00 | $1,503.00 |
There is also another huge advantage in subscribing to a mobiler plan. Many people don’t know this but your phone is under warranty for as long as you are under contract, which is usually 24 months. You are receiving an extended warranty by buying the phone as part of the contract. The reason for this is it would be unfair to charge you for a plan if you are unable to utilise the plan without a working phone.
It is always important to look at the hidden costs and benefits of each plan before jumping into a contract. iiCom can save you up to $459 over 24 months on repayments on a new phone. Talk to us to see what you can save!